Practical Solutions for Bonus Problems
President Obama should not veto any bill designed to recoup the costs of any large bonuses to individuals who worked for companies that received large federal taxpayer infusions. The truth is, the Bush administration, the Obama administration and the Congress blew it by not addressing this matter up front. These bonuses should have never been allowed to be paid in the first place. This is just another example of the consequences of failing to have clearly defined objectives, criteria and conditions for federal assistance up front and before any funds flowed.
The Obama administration and the Congress need to focus on the credit crunch as well as the nation's rapidly deteriorating financial condition, growing structural deficits and over reliance on foreign lenders. These represent the real threats to our collective future and yet, we see no real progress on these fronts. The time to focus on results versus rhetoric is now!!
There has been some controversy regarding the equity of the proposed taxation of certain bonuses made by companies receiving large amounts of federal assistance. One way to deal with this would be to not apply any extra tax to bonuses paid by companies who repay enough of their federal assistance to come under the $5 billion trigger amount by a stated date (e.g., September 30, 2008).
This would serve to provide an incentive for repayment while subjecting the tax only to payments from companies who may not have survived without federal assistance. If they didn't survive, the bonuses would not have been paid or could have been subject to recapture under the bankruptcy laws.
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